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Walmart Vs. Amazon – The Battle of The Retail Giants

Walmart Vs. Amazon – The Battle of The Retail Giants

What’s their next move?

Post by Barry Wolfe

Did you see this one coming?

Sam’s Club is building a small-format concept that will be “centered on convenience and a digital experience” stocking only 1,000 to 2,000 skus. (Read story here: http://www.supermarketnews.com/retail-financial/sam-s-club-develops-small-format-concept)

On the same day, it was revealed that the company opened the first of its new e-commerce fulfillment centers in Memphis, TN.

Interestingly, both announcements were made by Jamie Iannone, CEO of SamsClub.com and EVP of membership and technology.

I see this as a sign of things to come as e-commerce, fulfillment centers and brick-and-mortar locations merge in an omnichanneling landscape. In so many ways, Walmart is ahead of the game on this one. They have 660 Sam’s Clubs ands 4,672 Walmarts in the U.S. for a total of 5,332 sites. Amazon has 75 fulfillment centers and 412 Whole Foods.

This tells me that Walmart is in an excellent position to achieve penetration across a broader spectrum of markets, those that are e-commerce-friendly to slow adapters, from the coasts to rural areas. And, it also tells me that Amazon isn’t likely to sit by on such an unbalanced equation. They are likely to make a move that will allow them deeper market penetration, faster deployment, and access at a localized level. What will give them that advantage?

My inclination is toward drugstores. They’ve tackled food through Whole Foods, whose consumers mirrored their own customer profile and gave them grocery market entry via a physical location in a demographically-aligned trade area.

Next, would be medicine/drugstores/beauty. I’ve said this before as it gives them entry into a growing market segment (beauty) while gaining a foothold in a recession-resistant category (medical/drugstores). I’m not the only one thinking this is their next move. CVS is rolling out delivery for prescriptions and some over-the-counter medicines as it is said to be bracing for Amazon’s possible disruption. (Read more here: https://www.cnbc.com/2018/06/19/cvs-starts-drug-delivery-as-it-braces-for-expected-amazon-disruption.htmlThe drugstore’s merger with Aetna makes it an even more interesting player as Amazon has been making various supply-side moves.

Interestingly, Walmart just recently filed for several patents including a patents system for accessing medical records stored on a #blockchain, and just last month, Walmart was awarded two patents; one for a digital marketplace system that customers may use to resell items and the other geared towards facilitating customer deliveries to restricted areas using autonomous ground vehicles. Read full story here: https://www.ccn.com/walmart-patents-system-for-accessing-medical-records-stored-on-a-blockchain/

What will be Walmart’s next move? What will be Amazon’s next play?

Let me know your thoughts here: https://www.linkedin.com/feed/update/urn:li:activity:6415976467259224064

 

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Panera Bread Four Paws Up

We’re giving Panera Bread Four Paws Up for their commitment to continuous innovation and evolution while staying true to who they are as a brand.

 

 

As an example of their willingness to innovate, Panera recently grew their omni-channeling capabilities by expanding its delivery program to ~13,000 drivers and employees, up from 10k in 2017, making delivery available from 1,300 locations, in 897 cities, in 43 states using their app or website. 

Delivery is driving their digital sales which currently account for 30% of total sales, including kiosk orders. Unlike other chains that have turned to 3rd party delivery partners, which can take a significant cut (up to 30%!), Panera has developed their own fleet to control the process and profit end-to-end. (Think, pizza delivery but for bakery-cafe set.)

In addition, they’ve extended their technology to include mobile ordering and Rapid PickUp®, have a commitment to 100% clean food, and have one of the largest loyalty programs in the industry with over 25 million members (APR ’17).

As a result, Panera has been one of the most successful restaurant companies in history. Before the JAB acquisition in July 2017, Panera was the best-performing restaurant stock of the past 20 years, delivering a total shareholder return up 86-fold from July 18, 1997, to July 18, 2017, compared to a less than twofold increase for the S&P 500 during the same period.

Panera’s vision isn’t solely focused on technology and delivery.

In late 2017, Panera further enhanced its brick-and-mortar commitment by acquiring Au Bon Pain Holding Co. Inc., parent company of the 304-unit Au Bon Pain bakery-café chain. The acquisition reunites Panera and Au Bon Pain, and enhances Panera’s positioning and growth opportunities in new real estate channels, including hospitals, universities and transportation centers.

Excluding the Au Bon Pain acquisition, Panera grew its brick-and-mortar footprint through franchise and company-owned location growth with:

2017 Franchise-Owned*:

  • Outlets at the Start of the Year:  1,099
  • Outlets at the End of the Year:  1,112
  • Net Change:  +13

2017 Company-Owned

  • Outlets at the Start of the Year:  901
  • Outlets at the End of the Year:  931
  • Net Change:  +30

(*Source: FranchiseChatter.com)

In their last public quarterly report in APR 2017 (the same month in which they entered into an agreement to be acquired by JAB), the company reported that company-owned comparable net bakery-cafe sales increased 5.3%, franchise-operated comparable net bakery-cafe sales increased 0.3%, and system-wide comparable net bakery-cafe sales increased 2.6% compared to the same period in fiscal 2016.

 

Be a part of the Panera success model. See our extraordinary selection of single-tenant Panera properties from across the country here: http://wolferetailgroup.com/available-properties-for-sale/